AT&T





AT&T is a giant old American telecommunications company with the NYSE ticker
symbol T. AT&T provides voice, data & video telecommunications services,
including cellular telephone & Internet services, to businesses, consumers
and government agencies. At times during a long history, it has been the
world's largest telephone company and the world's largest cable TV operator,
and sometimes a monopoly.

History

The American Telephone and Telegraph Corporation was set up on March 3, 1885
to run the nation's first long-distance telephone network. Starting from New
York the network reached Chicago in 1892, and San Francisco in 1915.
Transatlantic services started in 1927 using two-way radio, but the first
transatlantic submarine telephone cable did not arrive until 1956, with
TAT-1.

The formation of the Bell Telephone Company superseded an agreement between
Alexander Graham Bell and his financiers, principal among them Gardiner G.
Hubbard and Thomas Sanders. Renamed the National Bell Telephone Company in
March 1879, it became the American Bell Telephone Company in March 1880. By
1881, it had bought a controlling interest in the Western Electric Company
from Western Union. Only three years earlier, Western Union had turned down
Gardiner Hubbard's offer to sell it all rights to the telephone for $100,000.

Alexander Bell's patent on the telephone expired in 1894, but the company
was successful in staving off competition through the use of harassment
lawsuits and price undercutting. On December 30, 1899, the American
Telephone and Telegraph Corporation bought the assets of American Bell,
creating what became an American telephone monopoly. It was known as the
Bell System because Bell had gradually acquired all the companies that
licensed its telephone equipment.

The telephone market was very competitive in the early 20th century. During
this period, AT&T officials spread rumors that the company was not doing
well; this caused nervous investors to sell stock in companies contracted to
AT&T. AT&T would then buy the stock in these companies cheaply, and soon
established itself nationwide as the primary provider of telephone service.
In 1907 AT&T president Theodore Vail proposed that a monopoly would be more
efficient. The federal government accepted this principle, initially in the
Kingsbury Commitment of 1913.

For most of the 20th century, AT&T subsidiary AT&T Long Lines enjoyed a
near-total monopoly on long distance telephone service in the United States.
AT&T also controlled 22 Bell Operating Companies which provided local
telephone service to most of the United States. There were many "independent
telephone companies," General Telephone being the most significant, but the
Bell System was very much larger than all the others, and was widely thought
of as a monopoly.

During the early 1920s, AT&T bought Lee De Forest's patents on the "audion",
the first triode vacuum tube, which let them enter the radio business.
Thanks to the pressures of World War I, AT&T and RCA owned all useful
patents on vacuum tubes. RCA staked a position in wireless communication;
AT&T pursued the use of tubes in telephone amplifiers. Some patent allies
and partners in RCA were angered when the two companies' research on tubes
began to overlap; there were many patent disputes.

AT&T, RCA, and their patent allies and partners finally settled their
disputes in 1926 by compromise. AT&T decided to focus on the telephone
business as a communications common carrier, and sold its broadcasting
subsidiary Broadcasting Corporation of America to RCA. The assets included
station WEAF, which for some time had broadcast from AT&T headquarters in
New York City. In return, RCA signed a service agreement with AT&T, ensuring
any radio network RCA started would have transmission connections provided
by AT&T. Both companies agreed to cross-license patents, ending that aspect
of the dispute. RCA, GE, and Westinghouse were now free to combine their
assets to form the National Broadcasting Company, NBC network.

Public utility commissions in all state and local jurisdictions regulated
the Bell System and all the other telephone companies. The Federal
Communications Commission (FCC) regulated all service across state lines.
These commissions controlled the rates that companies could charge, and the
specific services and equipment they could offer. Nonetheless, technological
innovation continued. For example, AT&T commissioned the first commercial
communications satellite, Telstar I in 1962. This and other new technologies
convinced the FCC to introduce competition in some sectors, and by 1975
general long-distance services were competing.

The rest of the telephone monopoly lasted until final settlement of a 1974
U.S. Department of Justice antitrust suit against AT&T on January 8, 1982,
under which AT&T agreed to divest its local exchange service operating
companies. Effective January 1, 1984, AT&T's local operations were split
into seven independent Regional Bell Operating Companies known as 'Baby
Bells'. AT&T, reduced in value by about 70%, continued to run all its long
distance services. Since this split, the telephone industry has seen much
more reorganisation, with many further splits, mergers and acquisitions.

In 1991, AT&T absorbed NCR Corp. (National Cash Register), but, in 1996,
divested it again, and voluntarily demerged most of the AT&T equipment
manufacturing operations and the renowned Bell Laboratories to create Lucent
Technologies.

AT&T now focused again on telecommunications operations, buying significant
cable television assets, including John Malone's TCI Corp. and Media One,
thus gaining a 25% share of Time Warner Cable.) AT&T was the largest
provider of cable television in the United States, intending to use these
assets to bridge the so-called "last mile" and break the Regional Bell
Companies' access-monopoly of the consumer household for data and telephony
services. With falling long-distance rates and a sagging market for
telecommunications services, AT&T could not sustain the debt incurred in
making these purchases, and had to change its plans. In 2002, AT&T sold its
cable TV (or "Broadband") assets to Comcast Communications Corporation.

In 2001, AT&T officially spun off AT&T Wireless Corp. in what was then the
world's largest IPO.

Nicknames

American Telephone and Telegraph was also known as Ma Bell and affectionly
called MOTHER by phone phreaks. Spinoffs like the Regional Bell Operating
Companies or RBOCs were often called Baby Bells. One can see "Ma Bell" and
"Baby Bells" are used even today in news headlines.